cant increases in speed and reductions in cost.”So far, the sector’s progress toward genuinedigital transformation varies from bank to bank.“Overall, organizations are in different phasesof the digital transformation,” reports ClaytonMitchell, a principal in Crowe Horwath’s riskconsulting area who specializes in financial ser-vices. “Some banks are already at the target stateand in the process of enhancements while otherscontinue to struggle with planning and determin-ing their digital strategy.”The largest banks generally have notchedthe most pro-gress, althoughsome larger bankswith more com-plex structuresand larger geo-graphic footprintshave lagged be-hind. Althoughmany smaller andmid-sized banksconfront uniquechallenges—in-cluding highertalent-management hurdles—small digitalstart-ups (i.e., Fin Tech companies) have so farbenefitted from some structural advantages,including a lack of decades-old informationtechnology (IT) systems and freedom frommany regulatory requirements.

Given these variables, industry experts and
digital-consulting leaders agree that it is wise to
establish upfront with clients what digital transformation means and involves.

“I would start by defining what digital transformation means,” says KPMG Financial Services Digital Transformation Leader Anthony
Rjeily. He explains that digital transformation
in retail banks typically involves one or more of
three interrelated dimensions.

The first dimension, “digital customer,”centers on using digital methods to redefineand enhance the way customers interact withthe bank. Most banks have ventured down thispath—with “mixed results,” Rjeily says. “Someof the large banks have been very successful indefining and designing new customer expe-riences while leveraging digital to automatethose personalized experiences.”The second dimension, “digital enterprise,”leverages digital technology to transform busi-ness processes, especially those in the back-of-fice, and update the bank’s legacy IT infrastruc-ture and data architecture. “Over the past 12months, this hasbecome muchmore of a hottopic” with retailbanks, Rjeily says.The final di-mension, “digitalinnovation,” con-cerns the strat-egy and structuresbanks use to com-pete, innovate andgrow. This workaddresses bigquestions: Should a bank collaborate with a Fin-Tech competitor or acquire it? If a bank choosesto develop a new digital product or business, howshould that business be structured and does it sitinside or outside of the bank’s existing structure?

Punching the Growth Button

These types of questions arise due to several
factors. While new and emerging technology—
including advanced data analytics, robotic process automation (RPA), blockchain and more—
represents a significant disruption to retail banks,
these advancements are not the only forces
fueling digital transformation.

Disruptive technology and the rise of Fin Tech
companies that run on it have existed for several years— Mint.com was founded more than a
decade ago. The current desire for comprehen-

If a bank develops anew digital product, howshould it be structured?Should it sit inside a bank’sexisting structure?““